2008 Highlights

Private sector operations amounted to UA 901.2 million in 2008. The private sector program for the year concentrated on infrastructure, with a special focus on geographical diversity (regional integration) and the inclusion of low-income countries.

With regard to low-income countries, the private sector provided equity participation to the Access Bank of Liberia and Advans Banque of the Democratic Republic of Congo (DRC) to support financial intermediation in these countries, particularly to help micro entrepreneurs, many of whom are women. In addition, several low-income countries benefited from regional/multinational operations through lines of credit (LOCs) extended to the West African Development Bank (BOAD) and to the PTA Bank for East and Southern Africa.

In terms of the sectoral distribution of private sector operations, financial intermediation accounted for the largest share of private sector approvals (50 percent), followed by industry (31.0 per cent), infrastructure (14.0 percent), agriculture (3.0 per cent), and multisector (2.0 per cent).

One example of a transportation PPP intervention approved in 2008 was for the upgrading and rehabilitation of the Lekki to Epe Toll Road in Nigeria (UA 52.4 million). A key project approved in 2008 for the industry sector was the Hasdrubal Oil and Gasfield Project in Tunisia (UA 96.3 million). The single largest approval for a private sector operation in a low-income ADF country during 2008 was the Guinea Alumina Project (UA 134.4 million).

In partnership with USAID, the Bank also approved a number of partial credit co-guarantee facilities (PCGFs) to financial intermediaries, such as the CRDB Bank in Tanzania (UA 4.9 million) and Zanaco Bank in Zambia (UA 14.9 million). These interventions aimed to deepen local financial markets by supporting SMEs’ access to finance. During the year, the Bank also continued to approve investments in equity funds, such as the multinational Third Emerging Capital Partners Africa Fund II (UA 32.1 million), which will target high-growth companies in the infrastructure, industrial, and natural resources sectors.

The Bank also played a key role in establishing the African Financing Partnership (AFP), which aims at leveraging the market skills and knowledge of development finance institutions (DFIs) in order to mobilize private sector resources for large-scale projects, particularly infrastructure .

Ex-ante Additionality and Development Outcome Assessment (ADOA) of Private Sector Operations

During the past 2 years, there has been significant expansion of private sector operations .The Bank, being mindful of the need to ensure development effectiveness (high quality at entry) of these interventions, approved in September 2008 the innovative ADOA framework for the ex-ante evaluation of its private sector operations. ADOA aims to record and maximize the expected effectiveness of all forthcoming private sector operations, through an independent review conducted by the Chief Economist Complex. Two ratings are systematically produced. The first focuses on the expected development outcomes, measured along 7 dimensions ranging from economic performance to effects on governments and macroeconomic resilience. The second looks at additionality, i.e. the unique role and contribution of the Bank and other DFIs; this is measured by improvements in the commercial viability or in the expected development outcomes.

The implementation of a one-year pilot of ADOA started on October 1, 2008. During the last quarter of 2008, 12 operations were assessed at either the concept note or appraisal phase. Six ratings were issued for operations at the appraisal stage. The expected development outcomes were good, with an average rating of 2 on a scale ranging from 1 ( excellent) to 5 (unsatisfactory). The additionality was found to be positive, with an average rating of 1.83 on a scale ranging from 1 (strongly positive) to 4 (none). The main positive development outcomes stemmed from private sector development and the effects on the RMCs’ budget. The principal source of additionality was improved project quality, followed by financial risk mitigation.